I’m Professor and Chair of the Department of Economics at LIU Post in New York. I’ve published several articles in professional journals and magazines, including Barron’s, The New York Times, Japan Times, Newsday, Plain Dealer, Edge Singapore, European Management Review, Management International Review, and Journal of Risk and Insurance. I’ve have also published several books, including Collective Entrepreneurship, The Ten Golden Rules, WOM and Buzz Marketing, Business Strategy in a Semiglobal Economy, China’s Challenge: Imitation or Innovation in International Business, and New Emerging Japanese Economy: Opportunity and Strategy for World Business. I’ve traveled extensively throughout the world giving lectures and seminars for private and government organizations, including Beijing Academy of Social Science, Nagoya University, Tokyo Science University, Keimung University, University of Adelaide, Saint Gallen University, Duisburg University, University of Edinburgh, and Athens University of Economics and Business. Interests: Global markets, business, investment strategy, personal success.

Why China Doesn't Have Its Own Steve Jobs

As China joins the rest of the world to discuss the legacy Steve Jobs leaves behind, many Chinese wonder why China doesn’t have Schumpeterian-style entrepreneurs, its own Steve Jobs, Bill Gates, or Mark Zuckerberg?

Because, as I discuss in China Against Herself, Schumpeterian entrepreneurship—that is the discovery and exploitation of new market opportunities and the introduction of products and process to exploit them—does not blend well with China’s culture of Confucian conformity to existing norms. Throughout China’s history, the established order saved little respect for inventors, entrepreneurs, and business pioneers.

China’s conformist and at times hostile attitudes towards entrepreneurs is sharply different from those of mercantile Europe, which were imbued with the ideas of Renaissance and Reformation and immersed in the ideas of Francis Bacon—ideas that eventually adopted and disseminated by the American Revolution.

China’s conformist attitudes could be further attributed to its fluid heredity system that allowed successful merchants to invest their profits in land and enter the rural landlord class. Moreover, China’s fair heredity system that passed family assets to all sons rather than to the older son puts less pressure on younger sons to pursue independent professions or business opportunities.

If Chinese society had little respect for business and entrepreneurs in the procommunist era, it saved no respect at all in the communist period when entrepreneurs were considered as part of the bourgeoisie, the capitalist class, sucking the blood and sweat out of the working class, especially during the Cultural Revolution. But even in the last 30 years of communist retreat and economic liberalization, the very concept of entrepreneurship is still different in China than in western societies and even some Asian countries. Instead of being seen as pioneers and risk-takers seeking market rents, entrepreneurs are regarded as heroic, hard-working social leaders, as role models for their fellow workers and society.

Worker heroism doesn’t nurture Schumpeterian style entrepreneurs and innovative companies like Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG), and Amazon (NASDAQ:AMZN), not because Chinese do not have the ability or knowledge to pursue innovations. Nor is it because of ill-intentioned communist leaders and government bureaucrats. Rather it can be traced to the nature of the Chinese institutions, which cannot follow and catch up with the demands of new technologies and global markets. In spite of the reforms in the post liberalization period, Chinese enterprises generally lack the information, the freedoms, and the incentives to develop pioneering products, because they remain “units” within a central plan rather than “firms,” within a market economy.

Within this institutional framework, entrepreneurship begins with the supply side of the market, with resources, rather on the demand side, with consumers, as is usually the case in market economies. Such an approach may be rational from the perspective of Chinese planners who are in command of enormous resources and anxious to find some quick uses that will produce short-term growth. But it is irrational from the perspective of fast-moving global markets where consumers rather than central planners are at the center of the economic universe.

To be fair, not all American companies understand and apply this mind-set. A number of technology companies from Eastman Kodak (NYSE:EK) to Cisco Systems (NYSE:CSCO), and Hewlett-Packard (NYSE: HPQ) have regressed from a consumer driven entrepreneurship to supply-driven entrepreneurship with dire consequences for their stakeholders.

The bottom line: To have its own celebrated entrepreneurs, China must develop a consumer-centered market economy that releases the ingenuity and creativity of its people in the search for novel ways to change consumers’ lives, amassing wealth for themselves in the process.

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